NEW YORK (TheStreet) -- Shares of International Paper Co. (IP) are rallying 1.45% to $49.76 on Monday as shares could rise about 40% in the next 12 months on the improving global economy, according to Barron's.
With the debt from acquiring Weyerhauser (WY) and Temple-Inland now paid down to a comfortable level, International Paper is turning its attention to returning more capital to shareholders as a possible stock buyback or higher dividend, Barron's reported.
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Separately, TheStreet Ratings team rates International Paper Co. as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate International Paper Co. (IP) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- INTL PAPER CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, INTL PAPER CO increased its bottom line by earning $3.01 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($3.55 versus $3.01).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Paper & Forest Products industry and the overall market on the basis of return on equity, INTL PAPER CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.2%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio of 1.24 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, IP's quick ratio is somewhat strong at 1.05, demonstrating the ability to handle short-term liquidity needs.
- You can view the full analysis from the report here: IP Ratings Report